There is this idea that, because inflation had been falling and low for a really long time, by this goldilocks period of the teens, that everybody expected low inflation. And those low inflation expectations contributed to the persistently low inflation. If people expect there to be high inflation, they will change their behavior. Companies might build incremental price increases into long term contracts. Workers, you know, to the extent they have bargaining power, will demand more raises.
The stock market tumble and crypto crash are symptoms of a broader shift in the US economy. Jacob Goldstein explains the end of the “Goldilocks Era.”
This episode was produced by Miles Bryan, edited by Matt Collette, fact-checked by Laura Bullard, engineered by Paul Mounsey, hosted by Noel King.
Transcript at vox.com/todayexplained
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